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On "China Dumps US Bonds" Attempts At Clickbaiting

Tyler Durden's picture




 

In the aftermath of last week's disclosure to preempt the massive hoax story sourced by one "Sorcha Faal" involving a whole lot of false allegations pertaining to DSK, Russia and gold, all of it based not one single, sourcable fact, we have now been inundated with emails directing us to a story which has appeared in CNS News (and the fact that it was carried by Drudge Report does make it any easier), titled "China Has Divested 97 Percent of Its Holdings in U.S. Treasury Bills." Once again, while most readers will see right through this superficial attempt at clickbaiting, for the benefit of everyone else, we would like to briefly respond to how this article would look like when one actually looks at the facts.

Where does one start..

First of all, we wonder why the author waited until now to highlight that Chinese short term debt holding had dropped to $5.69 billion in Bill holdings (in reality $5.7 billion) when back in June 2010 the total was far lower, or $3.999 billion. One could have penned a just as irrelevant headline that "China has divested 98% of Bills" last summer"... But one didn't, because as the next chart indicates, Chinese Bill holdings, which Zero Hedge reports on at every single monthly TIC update, are about 0.5% of total Chinese debt: in March the $5.7 billion in Bills was matched by $1139.2 billion in Long-Term Debt. Incidentally, Chinese LT debt has increased by $31 billion since last June, when Chinese bill holdings really hit an all time record low.

Here is what the "collapse" in Chinese Bill holdings looks like when mapped for the most recent series of Apples to Apples data - Chinese short term holdings in red; Long Term holdings in blue:

Second, and here is why we note the Apples to Apples data, it appears that the author of this article is unaware that TIC data gets revised on a periodic basis, especially as pertains to Chinese and UK holdings of Treasury data (we also wonder if the author knows that China often uses UK offshore proxies as a source of purchases, and thus he would have to account for UK short-term debt holdings in his expose). Back in February we made a mention of this: "Chinese Treasury Holdings Revised $268 Billion Higher To $1.12 Trillion, Fed Still Top Holder Of US Debt." As a result of the reclassification, any data relevant to China pre-June 2010 is unusable as the periodic TIC data revisions only goes back to any given June at which point the guessing game begins. In other words, for a factual and balanced report, the only data that could be extrapolated is that Chinese Bill holdings have declined from a peak of $45.9 billion to $5.7 billion in the current valid period of observation, while total holdings have increased from $1,112.1 to $1,144.9 billion. Hm, does not have quite the click bait headline features to it, does it?

And since the bulk of Chinese purchases in the current post-June series are once again occurring through the UK, perhaps the author can advise us just how many of the $17.3 billion in Bills held by the "UK" proxies of Chinese institutions are actually Chinese. This, however, can not be answered with any degree of confidence, until the next full year TIC data revision. We would imagine the answer is "more than quite a bit", thus making any even broadly generic statement of just what China's true exposure in terms of Bills is, impossible.

Third, what the author should have indicated, is that Chinese Bill holdings only surged back in 2008 as a result of the Lehman Bankruptcy, when everyone scrambled to the safety of short-term US debt. The long-term chart below (which we admit is not indicative of an apples to apples comparison, yet is the best that can be done with TIC data) showing the composition of Chinese ST and LT holdings shows that the May 2009 record Bills held was actually the outlier. The norm was the roughly $20 billion Bill average in the January-August 2008 period. That China would move back from Bills to Bonds once the Fed had decided to onboard all the US sovereign risk (any discussion of the fact that US taxpayers were saddled with $24 trillion in bank bailouts at the peak is something different altogether) is perfectly normal and is in no way indicative of anything ulterior, but merely prudent yield management.

Fourth, and this is a valid point which we noted the second it hit the tape, total Chinese holdings have declined for five months in a row. However, one would hardly make the conclusion that the 2.5% decline in notional bonds from October 2010 through today ($1,175.3 billion to $1,144.9 billion), is earthshattering, and certainly pointing out that total Chinese holdings have dropped by 2.5% from their peak has far less click-bait potential, than claiming that Chinese Bill holdings have declined by 97.5% from their peak.

Lastly, nowehere in the author's discussion is there any mention that the yield on the 3 Month is just 0.03%, on the 6 Month is 0.10% and on the 12 Month is 0.17%. Frankly, the Chinese would be stupid to keep money in Bill format. And yet they do. As to why the yields are where they are, that is also a totally different story, and has to do with the Fed's desire to recreate central planning (selling quite a few Treasury curve puts in the process or maybe even commencing Operation Twist 2) and succeed where so many Soviet dictators have failed.

The truth is that the only important chart is the one below, showing the notional of the top holders of US debt... and the Federal Reserve. Everything else quite frankly is irrelveant.  If China does indeed decide to dump its holdings, which it most certainly has not so far, trust us: you will hear it here first. And the real concern, for those who enjoy speculating on "what if" scenarios, is what happens if and when QE 3 is announced, and the Fed becomes a greater holder of US Treasury securities than China, Japan, the UK and pretty much everyone else combined.

 

 

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Sat, 06/04/2011 - 15:20 | 1339678 Gully Foyle
Gully Foyle's picture

So, DSK and company were not targets because of that whole Gold bugaboo?

Sat, 06/04/2011 - 15:20 | 1339681 I am a Man I am...
I am a Man I am Forty's picture

cleared that up

Sat, 06/04/2011 - 15:27 | 1339694 Slewburger
Slewburger's picture

Drudge should link to the Hedge more often...CNS, nigga plz.

Sat, 06/04/2011 - 15:42 | 1339734 Quixotic_Not
Quixotic_Not's picture

The only way that ZH will be quoted by the lame stream, of which Drudge is now an agent, is if they shut-down the user commentary, due to mouthbreathers like you.

Sat, 06/04/2011 - 16:14 | 1339785 Slewburger
Slewburger's picture

Stephen Hawking is a mouth breather...guess its up to one of us to offend the gays on this thread too. Is it still prejudiced if it offends everyone?

Sat, 06/04/2011 - 17:40 | 1339919 Id fight Gandhi
Id fight Gandhi's picture

What does any of this have to do with gays?

Sat, 06/04/2011 - 18:48 | 1340053 Slewburger
Slewburger's picture

/sarc off

I apparently hit a nerve with the N please.

I decided to play it up and capitalize on the opportunity to offend disabled folks with the mouthbreather/Hawking reference.

I figured going for the "the gays" would complete the bigotry trifecta.

Quixotic read my post and thought he had me pegged as such... just wanted to boost his self esteem. He's obviously got it all (me included) figured out with his L/R paradigm, like a kid who just discovered jerking off.

Sat, 06/04/2011 - 20:31 | 1340233 Quixotic_Not
Quixotic_Not's picture

Nope no nerve, just pointing out how mundacious your statement "Drudge should link to the Hedge more often..." in reality was, given the dumbed-down brainfart you followed it up with.

Don't be offended, plenty of trash-talking twits on ZH that add to the absolute dearth of decorum...

Sat, 06/04/2011 - 21:51 | 1340386 Hephasteus
Hephasteus's picture

Remember the rush limbaugh retard invasion. Rush limbaugh is mentioning zero hedge and then an hour later the IQ of the place drops to 12.

Sat, 06/04/2011 - 23:17 | 1340519 Alienated Serf
Alienated Serf's picture

Rush Limbaugh retard invasion. classic.

we really could use less of the bottom shelf commenters the site has seemed to attract recently.

Sun, 06/05/2011 - 13:54 | 1341427 Slewburger
Slewburger's picture

Mundacious?

Work those english skills son, no offense right?... You a hustla.

Sat, 06/04/2011 - 20:09 | 1340202 Don Quixotic
Don Quixotic's picture

ZeroHedge was mentioned by Bloomberg.

http://www.zerohedge.com/article/bank-americas-ethan-harris-explains-birth-death-adjustment

Go to 5:55 in the video.

Sat, 06/04/2011 - 15:34 | 1339704 Jerome Lester H...
Jerome Lester Horwitz's picture

Off topic but had to post;
Homeowners forclose on Bank Of America
digtriad.com/news/watercooler/article/178031/176/Florida-Homeowner-Forecloses-On-Bank-Of-America

Sun, 06/05/2011 - 00:22 | 1340619 OldPhart
OldPhart's picture

That's at least a month or so old, don't know why it's being pushed now.

Sat, 06/04/2011 - 15:31 | 1339707 Conrad Murray
Conrad Murray's picture

Why do we pay taxes or issue debt if they can just print the money they need?

Sat, 06/04/2011 - 15:38 | 1339718 ATM
ATM's picture

It gives the cleptocrats plausible deniability.

One thief says "We issued the debt and people bought it."

And the other thief gets to say, "We were just performing our double mandate."

Sat, 06/04/2011 - 18:19 | 1340000 macholatte
macholatte's picture

Why do we pay taxes or issue debt if they can just print the money they need?

There you have it!

Damn near eloquent, Conrad.

The answer might be found here:

http://video.google.com/videoplay?docid=-515319560256183936#

 

 

Sat, 06/04/2011 - 19:57 | 1340183 jaffi
jaffi's picture

Ah, yes.  The video from the Greenbacker movement.  While there is some good info in that video, there is also a lot of false information.  Their newest video 'The Secret of Oz' contains almost more fallacies than one can conceive in one sitting.  The only thing more fallacious than the Greenbacker movement is the MMT movement, which is pretty much nothing but Greenbacker-Keynesianism.  

Sun, 06/05/2011 - 18:27 | 1341951 LongBalls
LongBalls's picture

Excellent video. Probably to long for today's attention span but none-the-less succinct.

Sat, 06/04/2011 - 15:36 | 1339721 topcallingtroll
topcallingtroll's picture

I used to follow drudge regularly but it is clear they have now become an unreliable source of information.

Click baiting is a good term for what drudge does now.

Sat, 06/04/2011 - 15:49 | 1339745 Yen Cross
Yen Cross's picture

 TCT Drudge is just sensationalism, as is FOX.   I'm a conservative, and that fodder is just riling the masses to sell books. Beck is an Evangelist,  and O'Rielly is so out of touch, that his face appears under the term PITHY!

Sat, 06/04/2011 - 16:01 | 1339761 Quixotic_Not
Quixotic_Not's picture

Lame stream news organizations service either the (D) -or- (R) side of the Free Crap Empire™, you just gotta work the schtick to fit the niche.

The Fox News/CNN template, which now dominates the genre, is a cross between Lord of the Flies and Animal Farm in content.

Too bad, so sad, there aren't enough real Americans left to qualify as a niche...Common Sense is so passé.

Sat, 06/04/2011 - 16:05 | 1339774 Yen Cross
Yen Cross's picture

 Eloquent! Quixotic.

Sat, 06/04/2011 - 23:25 | 1340534 Smiddywesson
Smiddywesson's picture

I see nothing on Drudge but stories designed to make the Dems look bad and make the Republican politicians who spend just as much as the Dems look good.  Really, I am not interested in their propoganda.

Sat, 06/04/2011 - 18:56 | 1340069 High Plains Drifter
High Plains Drifter's picture

i wonder who it was that gave him the monica lewinski  story, that time ......that gave him his start.  and then he moved from north hollywood to south beach......

Sun, 06/05/2011 - 07:57 | 1340854 overmedicatedun...
overmedicatedundersexed's picture

the obvious socialist democrat apparatchik here on ZH..denigrate Drudge..some saying selected articles show GOP in good light or now unreliable news..well I suggest the reason Drudge is successful is it provides opposing views and prints what the TOTAL BIG MSM..omit or refuse to print ..and of course no where on network TV or newspapers can one find the constant praise and selected news to show Demorats in good light!! none zip zilch, NBC- hard ball chrissy will tell you that strait up.

Sat, 06/04/2011 - 15:38 | 1339731 Yen Cross
Yen Cross's picture

 I must be having ( Deja vous), or is it (Deja vo)?

Sat, 06/04/2011 - 15:44 | 1339741 magpie
magpie's picture

Don't worry, this headline will appear again and again.

It's perfectly natural.

Sun, 06/05/2011 - 00:18 | 1340612 OldPhart
OldPhart's picture

"It's deja vu all over again." Yogi Bera

Sat, 06/04/2011 - 15:51 | 1339746 partimer1
partimer1's picture

China gets a lot of dollars every month from exporting the stuff we buy here from US, and unless we stop buying the stuff, China will not stop accumulating the dollar. They need to send the dollar back to US by buying treasury bills or buy stuff from other countries using the US dollar. US dollar sitting in Bank of China is useless. The trouble is that China gets way too much dollar than they can dispose it. So they will not stop, knowing too well the yield of treasury is terrible. What can China do with the dollar in their hands? It's our dollar, but their problem.

Sat, 06/04/2011 - 17:47 | 1339933 swissinv
swissinv's picture

or the buy gold in USD... http://www.hkmerc.com/en/index.html

Sun, 06/05/2011 - 03:54 | 1340732 Redneck Makin-tosh
Redneck Makin-tosh's picture

who gets the difference between what you paid for the stuff and what china sold it for?

Sat, 06/04/2011 - 15:49 | 1339748 GeneMarchbanks
GeneMarchbanks's picture

So... no decoupling then? Shocking. I really believed their linearly based mammoth economy was nimble. Who knew...

sarc/ off

MAD it is!

Sat, 06/04/2011 - 16:02 | 1339766 breezer1
Sat, 06/04/2011 - 16:16 | 1339792 Tyler Durden
Tyler Durden's picture

Going forward please only link to sites that provide information that can be verified.

Sat, 06/04/2011 - 16:24 | 1339802 breezer1
breezer1's picture

i have seen the onion here...

Sat, 06/04/2011 - 16:31 | 1339821 oklaboy
oklaboy's picture

here, here. That site was muck, probsally a malware site, I had a hard time getting out of it. Beware everybody.

Sun, 06/05/2011 - 07:48 | 1340827 overmedicatedun...
overmedicatedundersexed's picture

"thus making any even broadly generic statement of just what China's true exposure in terms of Bills is, impossible."

>>>>>>>>>>

not to nit pick, but... Tyler the truth is not verifiable is it??  the fact China is moving from us Debt is accepted and stated here on ZH often..we just don't know how much how fast. best watch the Italian - Swiss border for suitcases of bonds carried by Asian men...are they going north or south??  the fact Drudge got the story prior to ZH would I guess piss off large Egos. 

 

Sat, 06/04/2011 - 16:22 | 1339801 Imminent Collapse
Imminent Collapse's picture

+1 Quix Patcheye

Sat, 06/04/2011 - 16:21 | 1339803 Island_Dweller
Island_Dweller's picture

Sarcasm on/

So soon you're going to write an article explaining to us how a 47 story tall building CAN fall symmetrically, at free fall speed and be completely explained by fire?

Sarcasm off/

No? 

I understand why you won't touch 911, Tyler.  But I sure would like to see it!

Sat, 06/04/2011 - 16:35 | 1339817 Yen Cross
Yen Cross's picture

 Are we talking to your Ghost? Beat it!  Find another vortex to create!

  Ref; Island Dweller. AKA (TOILET DWELLER)! POOF

Sat, 06/04/2011 - 16:47 | 1339846 Tuco Benedicto ...
Tuco Benedicto Pacifico Juan Maria Ramirez's picture

For all of you who think there is nothing fishy about the collapse of building 7, how do you explain this "false start" by BBC whereby they reported the collapse of building 7 twenty minutes before it actually collapsed.  In the background during this report building 7 still stands.  Please explain this all you blue pillers!

http://www.youtube.com/watch?v=C7SwOT29gbc

Tuco Benedicto Pacifico Juan Maria Ramirez

Sun, 06/05/2011 - 04:25 | 1340742 Incubus
Incubus's picture

What's worse than knowing that 9/11 was done by peoples within our own goverment is knowing that the proles don't give a fuck.

 

Honestly, reality doesn't apply to them.  They're trapped in their own social construct that will function until it cannot. And when it stops, it's going to be really nasty... but I don't care.

Sheeples'll deserve what they get. 

Sun, 06/05/2011 - 11:45 | 1341186 fastishplastic
fastishplastic's picture

full disclosure - i have no source, this is a simple thought experiment. if i were to create a giant skyscraper in manhattan, especially one that was of the highest profile, i would take requisite precautionary measures of all kinds. this would include, after doing everything to ensure otherwise, factoring in a potential collapse of such a building. if such a building could ever possibly collapse i would plan for it to pancake as opposed to timber - for obvious reasons in an urban environment. contingency might dictate that i install explosives on every floor to facilitate this horrendous potentiality. the conspiracy here is not that the gov planned the whole "inside job" but rather that someone on the inside had to make the impossible call resorting to contingency - detonating the explosives and pancaking the building. it stands to reason that if this were the case it would be covered up by tptb - again for obvious reasons. it also stands to reason that in the world of uncovering the truth, all angles should be considered. if you're gonna believe the unthinkable, that it was an inside job, you must first allow yourself to consider thought experiments like the above, as a possibility before concluding. i can imagine many other scenarios that, while still massively tragic, take some of the sting out of the truther's "truth". - just saying.   

Sat, 06/04/2011 - 17:28 | 1339897 slewie the pi-rat
slewie the pi-rat's picture

fight club, BiCheZ.  for publisherZ!  

YouTube - Wabash Cannonball - Blind Willie McTell

 

Sat, 06/04/2011 - 17:57 | 1339950 Yen Cross
Yen Cross's picture

 I gotcha back!!!!!!!!!

Sat, 06/04/2011 - 17:38 | 1339910 Missiondweller
Missiondweller's picture

Tyler, my sincere thanks for taking the time to debunk the story.

I bought into the story not understanding the larger context and greatly appreciate your explanaition.

ZH has become a much valued resource in understanding what's going on in the world.

Sat, 06/04/2011 - 17:40 | 1339915 mtomato2
mtomato2's picture

What's funny is that I never clicked on the article when I saw it on drudge I figured if. I needed to know it it would be here on ZH.

Sat, 06/04/2011 - 17:40 | 1339920 gmrpeabody
gmrpeabody's picture

+1

 

Sat, 06/04/2011 - 17:49 | 1339930 mtomato2
mtomato2's picture

Sorry about punctuation. Damn 'droid.

Sat, 06/04/2011 - 17:46 | 1339932 Urban Redneck
Urban Redneck's picture

Perhaps CNS News should avoid economics and stick to politics, or may be they like being slapped silly.

One minor point though -  

The truth is that the only important chart is the one below, showing the notional of the top holders of US debt... and the Federal Reserve.

There is one other very important holder of US public debt not in the chart, the US government itself (intergovernmental holdings).  As government trust or pension funds turn cash flow negative, increasing amounts of the maturing intergovernmental debt within the funds must be refinanced by the external borrowers (double whammy) since 100% of the funds' incoming revenues are used to cover current obligations, and the federal government is running perpetual deficits.  

Sat, 06/04/2011 - 18:13 | 1339973 Screwball
Screwball's picture

Some people are hard to convince.  I've had a conversation with a guy on another board that still buys the article, and thinks ZeroHedge and Tyler is full of shit.  When I called him on the article and posted this link, he came back with:

Maybe we should send this to Turbo Tim since it is the conclusion of his report that states that? But then we know he has limited understanding and especially tax law. Maybe zerohedge.com should ask him to explain? Is that partisan?

Maybe if it hadn't been on Drudge, we all know if they post it, it has to be true.

Sat, 06/04/2011 - 18:26 | 1340020 macholatte
macholatte's picture

Thanks much for the follow up, Tyler.

 

The pursuit of truth and beauty is a sphere of activity in which we are permitted to remain children all our lives.
Albert Einstein
Sat, 06/04/2011 - 18:30 | 1340027 Yen Cross
Yen Cross's picture

 Can you bar-BQ an Ice cube for me?

Sat, 06/04/2011 - 18:44 | 1340044 breezer1
breezer1's picture

do you walk to work or take your lunch?

Sat, 06/04/2011 - 19:00 | 1340072 equity_momo
equity_momo's picture

Matter of time : the day the dollar died -   http://www.youtube.com/watch?v=2N8gJSMoOJc&feature=related

 

as fictional as this maybe , it all revolves around China and Opec.    The US can bully OPEC - to a point - can they bully China?

Sat, 06/04/2011 - 19:28 | 1340129 slewie the pi-rat
slewie the pi-rat's picture

ok, this is just transitory.  rilly.  DSK gets arraigned on monday, indictment (grand jury, remember?) will be unsealed.  "...and how do you plead, Mr. S-K?" 

i hope his wife goes with him.  maybe this music for the day's proceedings?    YouTube - Loggins And Messina Holiday Hotel

Sat, 06/04/2011 - 20:03 | 1340192 MrBinkeyWhat
MrBinkeyWhat's picture

"China and Russia dump US Bonds"...wasn't that on 'Too Big to Fail' on HBO? /smirk

Sat, 06/04/2011 - 20:16 | 1340213 kito
kito's picture

tyler, whats with the "if" part of your statement regarding the forthcoming qe3? are we leaving ourselves a window out of our past bold predictions that it is certainly coming, come hell or high water, without a doubt, no way otherwise?

Sat, 06/04/2011 - 21:26 | 1340323 Miles Kendig
Miles Kendig's picture

Discovering the difference between bonds, bills & notes isn't all that hard.  Makes me wonder why there are those who "report" on finance or governmental affairs seem to have such little comprehension of them with all the research capability at their disposal.

Sat, 06/04/2011 - 21:31 | 1340329 Quixotic_Not
Quixotic_Not's picture

The average IQ of a reporter is about 90-100 in my experience, and I've worked with/known hundreds in NYC...

Journalism is a cult whose hallmark is an unrealistic sense of entitlement coupled with delusions of grandeur.

Sat, 06/04/2011 - 21:30 | 1340342 digalert
digalert's picture

I just found Obamas budget. Shut down the FED, tell them to eat shit on the $1.5 tril debt. Then Barama can use that cancelled debt for his pet redistribution programs.

Sat, 06/04/2011 - 22:10 | 1340438 Anonymouse
Anonymouse's picture

Great analysis TD.  I appreciate your debunking a story that might otherwise be a natural for ZH.  Credibility is key and we don't want to glom onto a sexy story only to have it blow up in our faces.  That just hurts the credibility for the real stories.

Well done

Sat, 06/04/2011 - 22:13 | 1340445 Problem Is
Problem Is's picture

Tyler, I keep telling you... you are taking Sorcha Faal all wrong, man...

It's about the UFOs and alien invasions, man... Tin foil up...

"Alien Attack Leaves 500 Dead In Texas As UFO ‘Fleet” Nears Earth"

"WikiLeaks Set To Reveal US-UFO War In Southern Ocean"

How could you not be down with:

"Death Star Pandemic of 2009-2012: End of Age Begins"

Sometimes... I just don't get you, mannnnn...

Sun, 06/05/2011 - 00:16 | 1340610 OldPhart
OldPhart's picture

<slinking back in>

whew, now I don't feel so bad about the online ass whipping Tyler gave me when I linked an alert. Even though I deserved it.

Apparently a shitload of others sent him email.

Sun, 06/05/2011 - 01:37 | 1340677 scratch_and_sniff
scratch_and_sniff's picture

lol clickbaiting, ZH would know nothing about that. <whistles>

Mon, 06/06/2011 - 10:43 | 1343204 no2foreclosures
no2foreclosures's picture

Matt Drudge (what a fitting last name) is a Zionist Jew's wet-dream. Pun intended. If it wasn't for Monica's blue dress and the fact that he is Jewish, the Drudge Report would still be looking for "news" in garbage dumpsters.

Do NOT follow this link or you will be banned from the site!